What happened

Shares of Criteo (CRTO -1.22%) rallied 10.2% in July, according to data from S&P Global Market Intelligence, as investors anticipated the ad-retargeting company's second-quarter 2019 report at the end of the month.

For perspective, the move only partially recouped Criteo's more than 20% drop through the first six months of the year. But when the company's Q2 release officially hit the wires the morning of July 31, shares briefly rallied as much as 10% that day before giving back the bulk of those post-earnings gains by the close -- a likely consequence of traders taking profits following Criteo's steady climb leading up to the report.

Orange colored 3-D image of Criteo's text logo.


So what

Still, Criteo stock rallied with good reason. Quarterly revenue excluding traffic acquisition costs (ex-TAC) grew a modest 0.3% at constant currency, to $223.9 million, which was near the high end of guidance for between $221 million and $224 million. Trending toward the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined 18%, to $56 million, but still arrived well above guidance for between $50 million and $53 million.

Criteo CEO JB Rudelle reiterated that the company continues to operate in a "challenging landscape" as it works to implement its transition to a multiproduct platform. But he also stressed he "feels good" about both the company's strategic direction and its ability to drive sustained, profitable growth over the long term.

To that end, Criteo added 360 net new clients during the quarter, bringing its total to 19,733, while maintaining a client-retention rate of close to 90%. If that wasn't enough, Criteo's board of directors approved a new $80 million repurchase program, valid through the middle of next year -- a move they say demonstrates "confidence in its business and its ability to generate free cash flow."

Now what

Given its solid start to 2019, Criteo reaffirmed its full-year guidance for revenue ex-TAC to be flat to up 2% at constant currency while maintaining adjusted EBITDA margin of roughly 30%.

To be clear, Criteo still has plenty of work to do before it silences the fears of bearish investors. There's no doubt, however, that last month's report was a step in the right direction, and Criteo stock jumped accordingly.